Aligning Revenue With Mission

Associations Now
March/April 2016 IssueBy: Katie Bascuas

As associations face pressure to develop new and innovative revenue-generating products and services, the most successful ones are leveraging what they already know and do well—starting by keeping their missions and industry know-how in mind.

Associations have never relied on dues as their sole source of income. But with increased competition for their members' attention from other associations and for-profit organizations, associations not only need to find the best avenues for recruitment and retention but also to think creatively about new programs, products, and services that will serve as additional revenue streams.

People are more willing to pay for commodities that satisfy discernable needs, such as books or conferences, says Steven Worth, consultant and president of Plexus Consulting Group. "In other words, if there's a tangible relevancy to the service or product you want, you're willing to pay," he says.

Career centers, licensing programs, and affinity programs are some of the services associations are increasingly turning to for generating nondues revenue. One thing they have in common is their ability to leverage institutional knowledge about members and the industries the organizations represent.

"Once you know more about membership, you're able to design more ways to serve them," Worth says. "That's where you're putting yourself on the path to growth and relevancy."

Targeted Advertising

Take AARP, itself no stranger to nondues-revenue-generating enterprises. Its publications, AARP The Magazine and AARP Bulletin, for example, have some of the highest circulation numbers in the United States, and its for-profit subsidiary, AARP Services, Inc., offers a host of benefits, including supplemental health insurance plans, life insurance, and endorsed financial services.

The number-one thing to remember is that all of the business practices that apply to for-profit businesses also apply in the nonprofit world.—Joe Vallina, American Nurses Association

Last year the group added a new operation to its for-profit mix with the launch of a full-scale marketing agency: Influent50. As its name suggests, the agency is dedicated to connecting businesses with consumers 50 and older. With clients including UnitedHealthcare, Chase, and Avis Budget Group, Inc., the agency is hoping to fill a hole in an advertising marketplace that is often hyperfocused on younger generations.

"We know more about consumers than ever before, and Influent50 gives a voice to an often overlooked consumer group," Dave Austin, managing director of Influent50, said in a statement announcing the new venture. "There is a paradigm shift around what it means to age, and we get it. We know how to uniquely reach and communicate to consumers 50 and over better than anyone else, and we don't rely on outdated stereotypes."

Influent50 relies on AARP's inherent understanding of and stake in the over-50 marketplace to tout itself as a relevant resource for marketers looking to target that specific demographic.

Mission Driven

Before launching a new nondues-revenue-generating product or service, it's critical to consider how it fits into your mission, Worth says. By keeping mission top of mind, organizations can weed through potential areas of opportunity and focus on those that are most relevant to their members and other customers—and, therefore, potentially most successful.

Three Steps to Nondues Revenue

Steven Worth, president of Plexus Consulting Group, explains three key considerations to keep in mind when growing or developing products and services meant to generate nondues revenue.

1. Stay focused on your mission. "There's the concern that if you stray too far from your mission, the IRS could come down on you and say, 'Well, these are unrelated incomes, and therefore it's taxable as a for-profit business,'" Worth says. And don't forget about mission creep. "If you're not focused on what your overall purpose is and how these products and services fit into that purpose, then you can find yourself straying into areas where you're not relevant or competitive—or worse, where you find yourself doing things that compromise your brand and your purpose as an organization."

2. Do your market research. Follow the lead of for-profit organizations: Research your competition and analyze how you fit into the market. Look at "where the opportunities are and where the pitfalls might be," Worth says. "It's a new era in which associations are becoming much more sophisticated and, ultimately, able to become more relevant to the needs of the people and society they serve."

3. Shift the culture. Determine how to integrate new initiatives into your organization's culture and decision-making processes. Worth recommends asking questions like "How are we going to create a leadership surge of energy that's going to push this through the organization where people will see the advantages and be willing to do new things?"—K.B.

"You are a mission-driven organization, so if you focus on that, you can explore how to create or expand services unique to your organization. You may even find yourself playing in markets where, perhaps, you've never been before," Worth says.

Mission was an integral factor when the American Nurses Association took a fresh look at its publishing arm, NurseBooks.org, and implemented a more critical and businesslike approach to the books it was producing and releasing.

Traditionally, the outfit "published what came through the policy pipeline," with little eye to how the revenue model stacked up or how those products might affect the publishing arm's image in the space, says Joe Vallina, ANA director of product management. So, a little over three years ago, the group looked at the operation through a more focused business lens to determine how its products related to the bottom line, as well as the organization's mission. The result: NurseBooks.org saw significant increases in revenue.

First, Vallina and his team ran the numbers on existing products to look at whether they were producing the right amount of revenue and whether ANA was using the appropriate marketing channels for the best possible promotion.

"That had never been done systematically before," Vallina says. "In doing so, we were able to right-size some of the smaller publications and bump up others to get cost efficiency, and then give a hard look at the prices we were charging for our products, which turns out were significantly underpriced for the marketplace."

ANA also took a hard look at its competition, including other associations and larger-scale publishers in the nursing space, to find holes in the market that ANA could exploit while remaining true to its mission. It discovered, for example, a promising niche in career and professionalism-oriented books that focus on policy issues and the daily lives of nurses, such as violence in the workplace and how best to handle information overload.

This led to a new series of books and greater diversification of its product line, improving the health of ANA's publishing finances and strategy.

"A lot of associations don't really take those hard business lessons into account when they're planning their product lines and product portfolios, and that I think is a must," Vallina says. "You must really look at things critically with business cases that are detailed and have good financial models going into the project, not just [taking] things by the seat of your pants."

Business Approach

PMMI, the Association for Packaging and Processing Technologies, took a similar approach when deciding the best way to expand its digital offerings in 2014. At the time, the group had two choices: Build a platform or buy one.

Eventually the association decided the best route was to acquire a publishing house and purchased Summit Media Group, with the vision of using Summit's existing platform to create greater opportunities not only for PMMI but also for other businesses in the packaging and processing supply chain.

The three main goals of the venture, which became the PMMI Media Group (PMG), were to generate revenue, increase attendance at PMMI tradeshows, and raise the association's reputation as an authority and thought leader by acquiring well-known publications and events produced in the packaging and industrial automation industry.

By purchasing an existing platform, PMMI saved considerable staff time and financial resources that would have been required to build a platform from scratch, and a proven platform offered significantly greater speed to market and a faster potential return on its financial investment, President and CEO Charles D. Yuska told AssociationsNow.com at the time of the purchase.

Developing new products and services or reinvigorating existing ones to generate nondues revenue is not without challenges, whether that's convincing staff and leadership to try a new approach or determining the best products that will result in increased revenue. But keeping mission and the bottom line at the forefront of everyone's thinking can mitigate barriers.

"The number-one thing to remember is that all of the business practices that apply to for-profit businesses also apply in the nonprofit world," ANA's Vallina says. "So that means doing a lot of due diligence up front, not doing pet projects if they are not justified by potential revenues, and [understanding] that the net revenue is not gross. Because you could make a million dollars, but if you spent a million and one to do that, why would you do that?"

[This article was originally published in the Associations Now print edition, titled "Branching Out."]

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